SA’s inflation beyond midpoint of target range

Despite South Africa’s inflation rate easing to 4.7% in July, it is still beyond the midpoint of the target range of its central bank.Fin24 reported that annual consumer price inflation slowed to its lowest level in two years, reaching 4.7% in July, from 5.4% in June. It is also the second consecutive month that inflation was below the 6% upper limit of the South African Reserve Bank's (SARB’s) target range. The South African Reserve Bank’s monetary policy committee prefers to anchor inflation expectations close to the 4.5% midpoint of its target range of 3%-6%. Year to date, inflation in South Africa averaged 6.3%.Fin24 further reported that the South African Reserve Bank is likely to leave its repo rate unchanged this year before kicking off a cutting cycle in early 2024, chopping 25 basis points (bps) in every quarter as inflation slows closer to its comfort level.At the fourth monetary policy announcement in June, SARB left the repo rate unchanged at 8.25%. Similarly, the Bank of Namibia (BoN) last week left the repo rate unchanged at 7.75%, 50 basis points behind South Africa.Year to date, SARB hiked the repo rate by 125 basis points, while BoN increased by 100 basis points.ProjectionsLooking at inflation, Namibia recorded a rate of 4.5% in July. Between January and July, inflation averaged 6.2%, according to the Namibia Statistics Agency (NSA). The Bank of Namibia now projects inflation to average 5.3 % in 2023, a downward revision from 6.1%. The Bank of Namibia does not target inflation.Reacting to BoN’s rate decision last week, PSG now forecasts that the Namibian central bank will keep the repo rate unchanged until the end of the first half (1H) of 2024.“In our view, the South African Reserve Bank will keep its repo rate at 8.25% until the end of H1 2024 to anchor South African inflation expectations. We expect the BoN will follow suit, with the Namibian repo rate falling back to 7.5% in the second half (H2) 2024,” PSG said.South Africa’s next monetary policy announcement is expected to take place on 21 September, while the fifth announcement by the Bank of Namibia is expected to take place on 25 October.- phillep@nmh.com.na

SA’s inflation beyond midpoint of target range

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Namibian Sun 2026-10-19

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SA’s inflation beyond midpoint of target range

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Namibian Sun 2026-10-19

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